Dr. John Cassidy treats patients with long-term care while operating Nexus Health Systems as a home-like business

Houston Business Journal - November 19, 2004

by Mary Ann Azevedo

Houston Business Journal

Physician-led businesses may not be the norm, but at least one Houston-based company has come up with a prescription for growth.

Dr. John Cassidy banded together more than a decade ago with three partners to form Nexus Health Systems. The founders wanted to create a specialized health care environment where patients with catastrophic neurological injuries can receive individual treatment and rehabilitation programs specific to their needs.

Company CEO Cassidy, a faculty member at Harvard Medical School, relocated to Houston in 1987, lured by Houston officials who were impressed with his initiation of a neuropsychiatry program at McLean Hospital in Boston

By 1992, Cassidy says he became discouraged by the number of health care businesses not operating in a manner consistent with ethical practices and decided to branch out on his own.

"I decided then it was time for me to see if I could build a better organization that was physician-led, not MBA-led," Cassidy recalls.

NeuroBehavioral Healthcare Systems -- now Nexus Health Systems -- was launched as a rehabilitation program based on taking care of individuals with severe, traumatic brain injuries.

Cassidy estimates it took $600,000 to purchase property in Conroe and provide initial working capital. Each partner contributed money from savings accounts, while Cassidy also loaned the limited partnership funds for operating expenses. In addition, the group got a bank loan to acquire the property.

Neurobehavioral Resources or 'The ranch'

The company's first care facility was Neurobehavioral Resources, commonly referred to as "The Ranch."

The 42-bed residential facility has a national referral base and provides treatment designed to care for area residents with acquired brain injury and other neurological injuries.

The Ranch also manages community-based programs that provide 24-hour and daily support to residents who live in homes in the local area, as well as a comprehensive outpatient program.

Early on, Cassidy realized that one of his biggest challenges would be to recruit a staff interested in taking care of patients for such long periods of time.

"It was more complicated than one would imagine to find staff who wanted to do, and had the heart for, this sort of work," he recalls.

In the end, Cassidy says, it took about nine months to consolidate a team. In the first year, the Conroe campus employed about 25 people. Today, 12 years and 375 employees later, he still faces the same challenge.

Over the years, Cassidy has added more centers to the Nexus Health Systems fold, saying the company's growth has been "organic."

Today, Nexus operates three medical specialty hospitals: Nexus Specialty Hospital in The Woodlands; HealthBridge Children's Hospital in Houston; and Health Bridge Children's Hospital in Orange, CA.  The company also continues to operate the Conroe campus.

Although Cassidy admits that business is a "whole new and different world that requires life-long learning," the company's revenue figures have steadily grown since inception -- from $16 million in 1999 to $29.3 million in 2003. And, Nexus has been profitable since the first year of operation.

Learning by experience

Cassidy says Nexus centers differ from long-term acute care competitors such as Houston-based Triumph Healthcare and Select Specialty Hospital Group because they are physician-led, "completely patient-focused" and offer "more home-like environments."

Indeed, all Nexus centers look like houses by design.

Looking back, Cassidy says the growth process hasn't always been smooth. He acknowledges that he "really underestimated" entering the Southern California market in terms of regulations and the amount of time it took to accomplish goals. While he still hopes to expand on a national level, Cassidy says he has learned a lot from that experience.

Cassidy is also considering expansion of some current Nexus facilities, and concedes that another early mistake was "building too small" -- which he is now attempting to rectify.

"If a center is too small to support the amount of fixed costs and overhead, optimal efficiency becomes an even bigger necessity," Cassidy says.

One fixed cost that never seems to drop is salaries, he says.

"You have to pay competitively. So to offset that fixed overhead, you have to operate very efficiently to make it work," Cassidy notes.

He says Nexus routinely conducts local market analysis to make sure the company's pay scales are competitive.

Attention to market analysis is also a factor in the latest Nexus project, a long-term acute care, 54-bed facility in Shenandoah, TX, near The Woodlands.   Nexus Specialty Hospital is scheduled to open in the second quarter of next year and will be the first two-story facility for Nexus, says Cassidy.

In July, Nexus broke ground on the 40,000-square-foot freestanding medical specialty hospital. Nexus will hire 100 to 150 individuals once construction is complete, Cassidy says.

"It will look more like a medical complex but will still maintain the home-like feeling," Cassidy says.

The hospital located in Shenandoah, TX at 110 Vision Park Blvd. will not be far from the company's current Woodlands facility, Nexus Specialty Hospital.   Once the new hospital is completed, both facilities will operate as a single hospital with two campuses.

Nexus Specialty Hospital will offer inpatient adult medical and rehabilitative care and include several intensive care units and high observation/telemetry rooms. The new hospital will also offer in-house diagnostic capabilities, including laboratory, portable X-ray, ultrasound, ventilator units and an endoscopic procedure room.

Houston-based Nexus will lease the facility from Alliance Development.

With 21 beds, Nexus Specialty Hospital has "historically taken care of folks who have had longer-term medical needs that are complex and are often technologically dependent," Cassidy says. "But we have outgrown it." 

Senatorial investor

State Sen. Tommy Williams, who is also president of Woodforest Financial Services, says he's worked with Cassidy since the early days by helping to provide employee benefits to Nexus employees.

Today, Sen. Williams and his wife are investors in Nexus Specialty Hospital in The Woodlands.

"From the very beginning, I was very impressed with Dr. Cassidy's ability to run a successful and profitable business while maintaining a patient-centered environment," says Williams.

He also remains impressed with Cassidy's compassion, good reputation and, on a more practical level, the fact that there is "generally a waiting list to get into his facilities."

Also, Williams was drawn to the non-traditional approach of providing home-like settings to patients.

"This type of care fills very a unique niche and people really appreciate it," he notes. "We're excited to be a part of it."